Republic of the Philippines

Case Digest

WESLEYAN UNIVERSITY PHILIPPINES, Petitioner,

vs.
NOWELLA REYES, Respondent.

Nature of the Case

The issue in this petition boils down to the legality of respondent

Nowella Reyes' termination as University Treasurer of petitioner
Wesleyan University - Philippines (WUP) on the ground of loss of
trust and confidence. Petitioner prays in this recourse that We
reverse the February 28, 2013 Decision of the Court of Appeals (CA)
in CA-G.R. SP No. 122536 which declared respondent's termination
illegal.

The Facts

On March 16, 2004, respondent Nowella Reyes was appointed as

WUP's University Treasurer on probationary basis. A little over a
year after, she was appointed as full time University Treasurer.

On April 27, 2009, a new WUP Board of Trustees was constituted.

Among its first acts was to engage the services of Nepomuceno
Suner & Associates Accounting Firm (External Auditor) to
investigate circulating rumors on alleged anomalies in the contracts
entered into by petitioner and in its finances.

Discovered following an audit were irregularities in the handling of

petitioner’s finances, mainly, the encashment by its Treasury
Department of checks issued to WUP personnel, a practice
purportedly in violation of the imprest system of cash management,
and the encashment of various crossed checks payable to the
University Treasurer by Chinabank despite management’s intention
to merelyhave the funds covered thereby transferred from one of
petitioner’s bankaccounts to another. The External Auditor’s report
embodied the following findings and recommendations:1

Treasury Department (Cash Management):

Findings:

1. It was noted that checks consisting of various checks

payable to teachers, staffs and other third parties had
been the subject of encashment directly with the
Treasury Department under the stewardship of Mrs.
Nowella A. Reyes,the University Treasurer. This practice
is a clear violation of imprest system of cash
management, hence, resulting to unsound accounting
practice. This laxity in cash management of those checks
were paid as intended for them. Recommendations:

For internal control reasons, the treasury should not

accept any check encashment from its daily collections.
Checks are being issued for encashment with our
depository bank for security reasons. The mere
acceptance of checks from the collections is tantamount
to cash disbursement out of collections.

Findings:

2. It was also noted that various checks payable to the

Treasurer of WUP x x x had been negotiated for
encashment directly to China Bank – Cabanatuan Branch,
while the intention of the management for these checks
were merely for fund transfer with the other account
maintained at China Bank. This practice is a violation not
 only in the practice of accounting/cash custodianship but
had been mingled with spurious elements. Unfortunately,
check vouchers relating to this exception are nowhere to
be found or not on file.

Findings:

3. A crossed check payable to the Treasurer – [WUP] x x x

had been negotiated for encashment to China Bank –
Cabanatuan Branch despite of the restriction indicated in
the face of the check. Unfortunately, the used check was
no longer found on file.

As a result of said audit, petitioner served respondent a

Show Cause Order and placed her under preventive
suspension.2 The said Show Cause Order required her to
explain the following matters found by the External
Auditors:

(a) your encashment of Php300,000.00 ofa crossed

check you issued payable to yourself (Chinabank
Check No. 000873613 dated 26 November 2008) x x
x;

(b) the encashment of various checks without any

supporting vouchers x x x;

(c) unliquidated cash advances in the aggregate

amount of Php9.7 million x x x.3

On June 18, 2009, respondent submitted her Explanation. Following

which, WUP’s Human Resources Development Office (HRDO)
conducted an investigation. Finding respondent’s Explanation
unsatisfactory, the HRDO, on July 2, 2009, submitted an
Investigation Report4 to the University President containing its
findings and recommending respondent’s dismissal as University
Treasurer.

Upon receipt of her notice of termination on July 9, 2009,

respondent post-haste filed a complaint for illegal dismissal with the
Arbitration Branch of the National Labor Relations Commission. She
contended that her dismissal was illegal, void and unjust, for the
following reasons:

First,her 60-day preventive suspension violated the Labor Code

provisions prohibiting such suspensions tolast for more than thirty
(30) days. Thus, the fact that she was not reinstated to her former
position before the lapse of thirty (30) days, amounted to
constructive dismissal;5 Second,there was a violation of her right to
substantive and procedural due process, as evidencedby petitioner’s
failure to apply the pertinent due process provisions under its
Administrative and Personnel Policy Manual;6 and

Finally,the charges against her werebased on mere suspicion and

speculations and unsupported by evidence.7

Petitioner, for its part, predicated its defense on the contention that
respondent was a highly confidential employee who handled
significant amounts of money as University Treasurer and that the
irregularities attributed to her in the performance ofher duties
justify her dismissal on the basis of loss of trust and confidence.8

Petitioner also averred that the 60-day preventive suspension thus

imposed does not necessarily make suchsuspension void, inasmuch
as the law merely requires that after a 30-day preventive
suspension, the affected employee shall automatically be reinstated.
But in the case of respondent, there was no need for her automatic
reinstatement inasmuch as she was duly terminated within the 30-
day period of her preventive suspension.9Moreover, respondent was
duly afforded her right to due process since WUP substantially
complied with the twin-notice rule.

Ruling of the Labor Arbiter

On December 15, 2010, Labor Arbiter Reynaldo V. Abdon rendered a

Decision finding for respondent. The dispositive portion of the
Labor Arbiter Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered,

DECLARING that complainant Nowella Reyes x x x [was] illegally
dismissed by respondent Wesleyan University Philippines.

Accordingly, respondent Wesleyan University Philippines through

its President is hereby DIRECTED to:

(1) Reinstate complainant Nowella Reyes to her former or

equivalent position without loss of seniority right;

(1.1) Since reinstatement is immediately executory, to

render a Report of Compliance to this Office within ten
(10) days from receipt of this Decision.

(2) Pay complainant Reyes her backwages, from the time of her
dismissal until reinstatement, the present sum of which is
₱429,000.00;

(3) Pay complainant Reyes, her 13th month pay in the sum of
₱52,000; her shared (sic) in related learning experience fee,
₱12,000.00; clothing allowance, ₱6,000.00; Honorarium as
member of standing committees, ₱4,000.00; and her vacation
leave credits in the sum of ₱17,862.59;

(4) Pay complainant Reyes, moral damages in the sum of

₱150,000.00, exemplary damages in the amount of
 ₱100,000.00, and 10% attorney’s fees in the sum of
₱77,086.25;

xxxx

SO ORDERED.10

The Labor Artbiter noted, as respondent has insisted, that the

charges against the latter were based on mere rumors and
speculations. As observed too by the Labor Arbiter, petitioner itself
was in the wrong because it had no proper policies on its accounting
and financial procedures and that the encashment and
accommodation of checks to personnel, especially after banking
hours, had been the practice of its previous and present
administrations. Thus, it was unfair to put all the blame on
respondent without any evidence that her actionswere highly
irregular, unfair or unjustified.11

As regards petitioner’sfindings on the alterations in the Check

Disbursement Voucher (CDV), unliquidated cash advances and
duplicate checks, the Labor Arbiter found and wrote:

Anent the alleged finding of the university that there was material
alteration on the documents as regards the Check Disbursement
Voucher (CDV), for allegedly there was an absence of Board
Resolution entry in the CDV filed in the Accounting while the copy
submitted by the Treasurer has a Board Resolution entry as well as
the word ATM on the payee portion on the photocopy as crossed out
while in the original it was not crossed out, respondent cannot
summarily state that complainant was at fault. The Human Resource
should have conducted an in-depth investigation on this matter.
Unfortunately, respondent just followed the twin-notice rule, and
did not conduct a thorough administrative investigation in
accordance with their own internal rules and policies in the Manual.
Consequently, this Office has serious doubt that such matter was the
fault of the complainant for the blame may fall on the accounting
personnel who is handling the CDV.

With respect to the unliquidated cash advances, it is not likewise the

fault of the complainant. She pointed out that follow ups of the
liquidation is [sic] being handled by the auditor, while respondent
claims that she was previously handling the same before it was
transferred to Accounting Office in August 2008. We see no evidence
to prove that the liquidation is being handled by the complainant
prior to August 2008. Moreover, it is common practice thatthe
Treasurer disburses the funds such as cash advances but the
liquidation must be done by the beneficiary of the fund, and the
responsible people who should follow up the liquidation is the
accounting office.

With respect to the duplicate checks, the same were done by a

syndicate or individuals not connectedwith the University. The bank
has already admitted responsibility in the encashment of these
checks and had returned the amounts to the respondent University,
thus complainant has no fault about this incident.12

Ruling of the NLRC

Petitioner filed an appeal withthe National Labor Relations

Commission (NLRC) which was granted in the tribunal’s Decision
dated July 11, 2011, declaring that respondentwas legally dismissed.
However, petitioner was ordered to pay respondent her
proportionate 13th month pay, the monetary value of her vacation
leave, and attorney’s fees.

Adopting a stance entirely opposite to that of the Labor Arbiter, the

NLRC held that respondent failed to controvert and disprove the
established charges of petitioner (as appellant-respondent) and
insteadconveniently put the blame on other departments for her
inculpatory acts. The NLRC opined that her termination was not
motivated by the change of petitioner’s officers but by the
University’s goal to promote the economy and efficiency of its
Treasury Department.13

In net effect, the NLRC found petitioner’s contention of loss of trust

and confidence in respondent with sufficient basis. While
respondent, so the NLRC notes, may not have been guilty ofwillful
breach of trust, the fact that she held a highly confidential position,
and considering that anomalous transactions transpired under her
command responsibility, provided petitioner with ample ground
todistrust and dismiss her.14 The NLRC explained:

In this case, complainant-appellee [herein respondent] may not have

been guilty of willful breach of trust. But as Treasurer of [WUP] who
handles and supervises all monetary transactions in the University
and being a highly confidential employee at that, holding trust and
confidence and after considering the series of irregular and
anomalous transactions that transpired under complainant-
appellee’s command responsibility, respondent has basis or ample
reason to distrust complainant-appellee. Thus, we cannot justly
deny [WUP] the authority to dismiss complainant-appellee.

The principle of respondent (sic) superior or command

responsibility may be cited as basis for the termination of
employment of managerial employees based on loss of trust and
confidence. In the Etcuban case (Ibid) the Supreme Court in
upholding the validity of petitioner-employee’s dismissal on the
ground of loss of trust and confidence, ruled that even if the
employee x x x had no actual and direct participation in the alleged
anomalies, his failure to detect any anomaly that would normally fall
withinthe scope of his work reflects his ineffectiveness and amounts
to gross negligence and incompetence which are likewise justifiable
grounds for his irregularity, for what is material is that his
actuations were more than sufficient to sow in his employer the
seed of mistrust and loss of confidence.
As found by the External Auditor, complainant-appellee should have
implemented an imprest system of cash management in order to
secure the indicated payees in those checks and they were paid of
the checks as intended for them. It appears that checks payable to
teachers, staffs and other third parties had beenthe subject of
encashment directly with the Treasury Department x x x and this is
an unsound accounting practice.

Moreover, the External Auditors found that various checks payable

to the Treasurer of Wesleyan University has been negotiated for
encashment directly to China Bank-Cabanatuan Branch while the
intention of the management for those checks weremerely for fund
transfer with the other account maintained at China Bank. That this
practice violated accounting or cash custodianship and check
vouchers are nowhere to be found.

Further, the crossed check payable to the Treasurer

(complainantappellee) in the amount of ₱300,000.00 dated 26
November 2008 had been negotiated for encashment to China Bank
– Cabanatuan Branch despite of restriction indicated in the face of
the check and that the used check was no longer found on file. There
is a need for a clear policy when to issue crossed-checks or
otherwise and the use of debit/credit memo to transfer one account
to another with the same bank. That these acts of violation of cash
and check custodianship by complainant-appellee resulted in the
loss of respondent-appellant thus affecting the economy of the
respondent-appellant institution.

In view of our finding that respondents-appellants (sic) has validly

terminated complainant-appellee the latter’s claim for damages and
attorney’s fees lacks sufficient factual and legal basis. Accordingly,
the Labor Arbiter’s decision directing the reinstatement of
complainantappellee with full backwages ishereby vacated and set
aside.15
The NLRC denied respondent’s motion for reconsideration in a
Resolution dated September 29, 2011.Therefrom, respondent went
on Certiorari to the CA, inCA-G.R. SP No. 122536.

Ruling of the Court of Appeals

On February 28, 2013, the CA, through its assailed Decision,16 found
the NLRC’s ruling tainted with grave abuse of discretion and
reinstated the Decision of the Labor Arbiter. The fallo of the CA
Decision reads:

WHEREFORE, premises considered, the assailed Decision and

Resolution of the National Labor Relations Commission dated July
11, 2011 and September 29, 2011 are REVERSED and SET ASIDE.
The Decision of the Labor Arbiter dated December 15, 2010 is
hereby REINSTATED, subject to the modification that if
reinstatement is no longer feasible, petitioner shall be awarded
separation pay equivalent to one month salary for every year
ofservice reckoned from the time of employment to the finality of
this decision.17

Holding that respondent’s termination was unjust, the CA, in virtual

restoration of the findings and conclusions of the Labor Arbiter,
pointed out, among others, that: (1) respondent sufficiently
countered all charges against her; (2) it had been the practice of the
previous and present administrations of petitioner to encash and
accommodate checks of WUP personnel; thus, it would be unjust to
penalize respondent for observing a practice already in place when
she assumed office; (3) the duty to liquidate cash advances is
assigned to the internal auditor; (4) it has been established that the
encashments of spurious duplicate checks were perpetrated by
individuals not connected with WUP, and that the bank admitted
responsibility therefor and had returned the amount involved to
petitioner; (5) there was no imputation of any violation of the
University’s Administration and Personnel Policy Manual; (6) while
the acts complained of violated the imprest system of cash
management, there was no showing that the said system had been
adopted and observed in the school’s accounting and financial
procedures; and (7) there was no showing that respondent had the
responsibility to implement changes in petitioner’s accounting
system even if it were not in accordance with the generally accepted
principles of accounting.18

Hence, the instant petition.

The Issues

For consideration herein are the following issues raised by

petitioner:

1. Whether or not the CA over-reached its power of review

under Rule 65 of the Rules of Court when it reversed the
judgment of the NLRC; and

2. Whether or not the CA erred in finding respondent illegally

dismissed by petitioner on the ground of loss of trust and
confidence.

The Court’s Ruling

The petition is impressed with merit. The CA erred in reinstating the

Labor Arbiter’s Decision and in finding that respondent was illegally
dismissed.

The CA’s power of review

We first resolve the procedural issue raised in this recourse.

Petitioner contends that the CA over-reached its power of review
under Rule 65 when it substituted its own judgment over errors of
judgment that it found in the NLRC Decision, stressing that the
province of a writ of certiorari is to correct only errors of
jurisdiction and not errors of judgment.

This contention is misplaced. It is settled that under Section 9 of

Batas Pambansa Blg.129,19 as amended by Republic Act No.
7902,20 the CA, pursuant to the exercise of its original jurisdiction
over petitions for certiorari, is specifically given the power to pass
upon the evidence, if and when necessary, to resolve factual issues.
Sec. 9 clearly states:

The Court of Appeals shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to
resolve factual issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant and conduct new
trials or further proceedings. x x x

Hence, the appellate court acted within its sound discretion when it
re-evaluated the NLRC’s factual findings and substituted the latter’s
own judgment.

Loss of trust and confidence as a ground for termination

We now proceed to the substantive issue on the propriety of

respondent’s dismissal due to loss of trust and confidence.As
provided in Art. 282(c) of Presidential Decree No. 442, otherwise
known as the Labor Code of the Philippines:

Article 282. Termination by employer.An employer may terminate

an employment for any of the following causes:

xxxx

c. Fraud or willful breach by the employee of the trust reposed in

him by his employer or duly authorized representative;
We explained in M+W Zander Philippines, Inc. v. Enriquez21 the
requisites of a valid dismissal based on loss of trust and confidence.
As the case elucidates:

Article 282 (c) of the Labor Code allows an employer to terminate

the services of an employee for loss of trust and confidence. Certain
guidelines must be observed for the employer to terminate an
employee for loss of trust and confidence. We held in General Bank
and Trust Company v. Court of Appeals, viz.:

[L]oss of confidence should not be simulated. It should not be used

as a subterfuge for causes which are improper, illegal, or unjustified.
Loss of confidence may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary. It must be genuine, not a
mere afterthought tojustify earlier action taken in bad faith.

The first requisite for dismissal on the ground of loss of trust and
confidence is that the employee concerned must be one holding a
position of trust and confidence.

There are two classes of positions of trust: managerial employees

and fiduciary rank-and-file employees.

Managerial employees are defined as those vested with the powers

or prerogatives to lay down management policies and to hire,
transfer, suspend, lay-off, recall, discharge,assign or discipline
employees or effectively recommend such managerialactions. They
refer to those whose primary duty consists of the management of
the establishment in which they are employed or of a department or
a subdivision thereof, and to other officers or members of the
managerialstaff. Officers and members of the managerial staff
perform work directlyrelated to management policies of their
employer and customarily and regularly exercise discretion and
independent judgment.
The second class or fiduciary rank-and-file employees consist of
cashiers, auditors, property custodians, etc., or those who, in the
normal exercise of their functions, regularlyhandle significant
amounts of money or property. These employees, though rank-and-
file, are routinely charged with the care and custody of the
employer’s money or property, and are thus classified as occupying
positions of trust and confidence.22

xxxx

The second requisite of terminating an employee for loss of trust

and confidence is that there must be an act that would justify the
loss of trust and confidence. To be a valid cause for dismissal, the
loss of confidence must be based on a willful breach of trust and
founded on clearly established facts.23

To summarize, the first requisite is that the employee concerned

must be one holding a position of trust and confidence, thus, one
who is either: (1) a managerial employee; or (2) a fiduciary rank-
and-file employee, who, in the normal exercise of his or her
functions, regularly handles significant amounts of money or
property of the employer. The secondrequisite is that the loss of
confidence must be based on a willful breach of trust and founded
on clearly established facts.

In Lima Land, Inc. v. Cuevas,24 We discussed the difference between

the criteria for determining the validity of invoking loss of trust and
confidence as a ground for terminating a managerial employee on
the one hand and a rank-and-file employee on the other. In the said
case, We held that with respect to rank-and-file personnel, loss of
trust and confidence, as ground for valid dismissal,requires proof of
involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer would
not suffice. Withrespect to a managerial employee, the mere
existence of a basis for believing that such employee has breached
the trust of his employer would suffice for his dismissal. The
following excerpts from Lima Land are instructive:

As firmly entrenched in our jurisprudence, loss of trust and

confidence, as a just cause for termination of employment, is
premised on the fact that an employee concerned holds a position
where greater trust is placed by management and from whom
greater fidelity to duty is correspondingly expected. This includes
managerial personnel entrusted with confidence on delicate
matters, such as the custody, handling, or care and protection of the
employer’s property.The betrayal of this trust is the essence of the
offense for which an employee is penalized.

It must be noted, however, that ina plethora of cases, this Court has
distinguished the treatment of managerial employees from that of
rank-and-file personnel, insofar as the application of the doctrine of
loss of trust and confidence is concerned. Thus, with respect to rank-
and-file personnel, loss of trust and confidence, as ground for valid
dismissal, requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and accusations
by the employer will not be sufficient. But as regards a managerial
employee, the mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for
his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required, it being sufficient that
there is some basis for such loss of confidence, such as when the
employer has reasonableground to believe that the employee
concerned is responsible for the purported misconduct, and the
nature of his participation therein renders him unworthy of the
trust and confidence demanded of his position.

On the other hand, loss of trust and confidence as a ground of

dismissal has never been intended to afford an occasion for abuse
because of its subjective nature. It should not be used as a
subterfuge for causes which are illegal, improper, and unjustified. It
must be genuine, not a mere afterthought intended to justify an
earlier action taken in bad faith. Let it not be forgotten that what is
at stake is the means of livelihood, the name, and the reputation of
the employee. To countenance an arbitrary exercise of that
prerogative is to negate the employee’s constitutional right to
security of tenure.25

Respondent’s employment classification is irrelevant in light of her

proven willful breach

There is no doubt that respondent held a position of trust; thus,

greater fidelity is expected of her. She was not an ordinary rank-
and-file employee but an employee occupying a very sensitive
position. As University Treasurer, she handled and supervised all
monetary transactions and was the highest custodian of funds
belonging to WUP.26 To be sure, in the normal exercise of her
functions, she regularly handled significant amounts of money of her
employer and managed a critical department.

The presence of the first requisite iscertain. So is as regards the

second requisite. Indeed, the Court finds that petitioner adequately
proved respondent’s dismissal was for a just cause, based on a
willful breach of trust and founded on clearly established facts as
required by jurisprudence. At the end of the day, the question of
whether she was a managerial or rank-andfile employee does not
matter in this case because not only is there basis for believing that
she breached the trust of her employer, her involvement in the
irregularities attending to petitioner’sfinances has also been proved.

To recall, petitioner, per its account, allegedly lost trust and

confidence in respondent owing to any or an interplay of the
following events: (1) she encashed a check payable to the University
Treasurer in the amount of three hundred thousand pesos (PhP
300,000); (2) she encashed crossed checks payable to the University
Treasurer, when the intention of management in this regard was to
merely transfer funds from one of petitioner’s accounts to another
in the same bank; (3) she allowed the Treasury Department to
encash the checks issued to WUP personnel rather than requiring
the latter to have said checks encashed by the bank, in violation of
the imprest system of accounting; (4) she caused the disbursement
of checks without supporting check vouchers; (5) there were
unliquidated cash advances; and (6) spurious duplicate checks
bearing her signature were encashed causing damage to petitioner.

We disagree with the CA’s finding that respondent has sufficiently

countered all inculpatory allegations and accusations against her. On
the contrary, We find that here, there was anadmitted, actual and
real breach of duty committed by respondent, which translates into
a breach of trust and confidence in her. For perspective,
respondent’s explanation as to the charges against her is as follows:

1. That the alleged crossed check issued by her payable to THE

TREASURER – WUP was done in the exercise of her duty and
function as such, and not with her name and not to herself and
personal favor, and that said check had been prepared passing
through the usual system; 2. That the University heads were
the beneficiaries of said amount who strongly requested that
their love giftbe given, hence, the encashment;

3. That the amount of the check was properly disposed of as

evidenced by the document bearing the signatures of
recipients;

4. That the Office to pointto if vouchers and supporting

documents will have to be checked concerning payments made
is the Accounting Office;

5. That cash advances to various University personnel pass

through her office in the exercise of her duties assuch but the
office who follow up the liquidation of payments received is
the Office of the University Auditor;

6. That respondent Reyes adopted her reply on the show-cause

order in the investigation previously conducted by Dr. Jeremias
Garcia about the duplicated checks alleging among others:

a) She and her staff confirmed that only the checks issued
to General Capulong and Leodigario David were encashed
by the University Teller;

b) The check issued to Norma de Jesus was encashed by

the Pick-up Chinabank Teller on December 5, 2008 while
collecting deposits from the University with the
assistance of the University teller;

c) That the check issued to Mercedes was not encashed

with the University teller but with WEMCOOP;

d) As to the encashment and accommodation of checks to

personnel, it has been the practice of previousand present
administration moreso when employees cannot anymore
go to Chinabank to transact business as it is mostly
beyond banking hours when checks are ready for
disbursement;

e) That Respondent’s department has no control over

fraudulent transactions done outside the University, that
it is the Bank’s duty to protect its clients as tothe proper
procedures to secure our account;

f) That the computer system program of the University’s

depository bank has very limited capabilities to detect
fraudulent entries;
 g) That the signature verifier also had been remiss in
carefully checking the authenticity ofprevious
signatories.27

a. Respondent’s encashment of checks

As it were, respondent did not deny, in fact admitted, the

encashment of the three hundred thousand peso (PhP 300,000)
crossed check payable to the University Treasurer which covered
the total amount of the "love gift" for administrative and academic
officials of WUP. Neither did she deny the fact that the Treasury
Department encashed checks issued to WUP personnel rather than
requiring them to have the checks encashed by the bank. Instead,
she explained that the beneficiaries of the amounts strongly
requested that their love gifts be given in cash, hence the
encashment of the PhP 300,000 crossed check and, thereafter, the
accommodation and encashment of their checks directly by the
Treasury Department. Moreover, she submitted a document bearing
the signatures of the recipients of the "love gift" as proof that the
amount was disposed properly.28 She further insisted that this was
the usual practice of the University and that she merely
accommodated the requests of WUP personnel especially when
Chinabank was already closed.

Jurisprudence has pronounced that the crossing of a check means

that the check may not be encashed but only deposited in the
bank.29 As Treasurer, respondent knew or is at least expected to be
aware of and abide by this basic banking practice and commercial
custom. Clearly, the issuance of a crossed check reflects
management’s intention to safeguard the funds covered thereby, its
special instruction to have the same deposited to another account
and its restriction on its encashment.

Here, respondent, as aptly detailed inthe auditor’s report,

disregarded management’s intentions and ignored the measures in
place to secure the handling of WUP’s funds. By encashing the
crossed checks, respondent put the funds covered thereby under the
riskof being lost, stolen, co-mingled with other funds or spent for
other purposes. Furthermore, the accommodation and encashment
by the Treasury Department of checks issued to WUP personnel
were highly irregular. First, WUP, not being a bank, had no business
encashing the checks of its personnel.30 More importantly, in
encashing the said checks, the Treasury Department made
disbursements contrary to the wishes ofmanagement because, in
issuing said checks, management has madeclear its intention that
monies therefor would be sourced from petitioner’s deposit with
Chinabank, under a specific account, and not from the cash available
in the Treasury Department.

That the encashment of crossed checks and payment of checks

directly to WUP personnel had been the practice of the previous and
present administration of petitioner is of no moment. To Our mind,
this was simply respondent’s convenient excuse, a poorlydisguised
afterthought, when her unbecoming carelessness in managing
WUP’s finances was exposed. Moreover, the prevalence of this
practice could have been contained if only respondent consistently
observed the regular procedure for encashing crossed checks and
properly handled requests for accommodation of checks issued to
the WUP personnel.

b. Unliquidated cash advances

On the matter of unliquidated cash advances in the aggregate

amount of nine million seven hundred thousand pesos (PhP
9,700,000), respondent explained that while it was true that cash
advances to WUP personnel passed through her office in the
exercise of her duties as University Treasurer, the office that follows
up the liquidation of advances received is the office of the University
Auditor.31 However, granting that the responsibility of handling the
liquidation of cash advances is no longer lodged in her office, there
is proof showing that before the Treasury Department was relieved
of said responsibility, the total unliquidated cash advances was even
bigger, amounting to eleven million five hundred thirty-three
thousand two hundred thirty pesos and thirty-seven centavos (PhP
11,533,230.37). There is nothing in the records before us showing
that respondent denied the following findings in the Investigation
Report of the WUP’s Human Resource Development Office
(HRDO)on this matter, to wit:

In the matter of unliquidated cash advances in the aggregate amount

of Php9.7million as found by the External Auditors, respondent’s
contention was that cash advances tovarious University personnel
pass through her office in the exercise of her duties as such but the
office who follows up the liquidation of payments received is the
Office of the University Auditor.

On the inquiry done x x x of the Internal Auditor, Treasury and

Accounting officer on July 1, 2009, it was found out that the
responsibility of handling cash advances and liquidation report was
transferred from Treasury Office to Accounting Office on August
2008, when Ms. Luzviminda Torres, the personnel handling the
same detailed at the Treasury Office went on leave. It was
transferred to Ms. Julieta Mateo. What was surprising was that as
per certification and summary submitted by Ms. Mateo, the amount
of unliquidated cash advances previous to August 2008, when the
same was under the responsibility of the Treasury Office, was even
bigger with the total amount of ELEVEN MILLION FIVE HUNDRED
THIRTY THREE THOUSAND, TWO HUNDRED THIRTY PESOS AND
THIRTY SEVEN CENTAVOS (Attached as Annex "G")

Even if there is truth in the contention of herein Respondent that

she was no longer the one in charge of the liquidation proceedings,
the same would not absolve her from gross negligence of duties. The
fact that the said function was with her office until August 2008,
with unliquidated cash advances even bigger, still showed that she
reneged in her duties which she had overlooked for so long. She now
mistakenly points the responsibility to the Office of the University
Auditor. These informations are enough to be considered as
Respondent’s acts constitutive of breach of trust and confidence.32

xxx

c. Other irregularities inrespondent’s performance

In all, We find the Investigation Report of the HRDO a credible,

extensive and thorough account of respondent’s involvementin
incidents which are sufficient grounds for petitioner’s loss of trust
and confidence in her, to wit:

Respondent Nowella C. Reyes has committed breach of trust and

confidence in the conduct of her office.

In her answer, Respondent admitted the encashment of the crossed

check with the defense that the same was done in the performance
of her duty, not for her personal use but because of the request of
University heads who wanted their love gifts begiven. She
alsoadmitted habitual encashment of checks issued by the
University to its personnel on the basis of practice of previous
administration.

The charge against Respondent of the act of improper encashment

of a check, which aside from being irregular is clearly violative of
imprest system of cash management. Moreover, the same being a
crossed check, should not be negotiated for encashment to
Chinabank – Cabanatuan Branch because of the restriction indicated
on its face, which Mrs. Reyes, by reason of her office knew very well.

During the investigation conducted, it was revealed that the check

disbursement voucher attached by Respondent on her answer to
justify the regularity of its issuance and eventual encashment was
not exactly the same as the one filed at the Accounting Office. It
showed that the photocopy of the original CDV which was attached
by Respondent (attached as Annex "E"of this report) bear some
material alterations, namely:

1. The absence of entry of the Board Resolution which was

reflected as a sort of inquiry by the Internal Auditor, and which
at present was left blank on the original, as compared to the
photocopy submitted by respondent bearing an entry of the
Board Resolution number;

2. The word ATM on the payee portion of the CDV in the

original as compared to the photocopy wherein the entry ATM
was crossed out.

During a discussion with the external auditors, it was categorically

stated by them that during the courseof external audit, said
document was inexistent in the records presented by the Accounting
and Treasurer’s Offices. The production of the photocopy by
Respondent already altered only after the suspension was effected
cast doubt on the regularity of its issuance, negating her otherwise
claim. Another significant observation was that the original copy of
CDV (attached as Annex "F" of this report) and corresponding
signatures of administrative heads who received payments showed
folded marks halfways, with the fastener holes unmatched, showing
that those two documents were not really filed together, as regularly
done, and the same were not filed in the regular course and must
have been kept previously on a different manner in possession of
person other than the office which must file the same.

xxxx

On the last charge in the show cause order specifically the existence
of duplicate checks in the account of the University amounting to
Php 1.050 Million, included in Respondent’s defenses were that
among the checks duplicated, only two of them were encashed with
the University Teller, and the check originally named to Norma de
Jesus as payee was paid by the pick-up teller only through the
assistance of the University teller.

Again, Respondent’s defense were void of truth and merit. The act of
encashing checks issued by the Treasury Office, clearly violative of
imprest system of cash management which Mrs. Reyes by reason of
her office knew very well, showed that Respondent directly reneged
in her duty to observe economic security measures.

As found on the documents attachedto the Investigation report of

Dr. Garcia which had been expressly adopted by herein respondent
in her answer is an Affidavit of Norma de Jesus stating that she
actually encashed the check with the personnel of the Treasury
Office particularly Shirley Punay, who gave her the
amountequivalent days after the check was handed to the Treasury
office.

However noble the intention of herein Respondent in helping her

fellow workers in the University by her acts of accommodation by
encashing their checks directly withthe Treasury Office when
Chinabank was already closed, the same still reneged in her duty to
protect the economic security of the University. An act of
misconduct which caused [sic]33

An employer cannot be compelled toretain an employee who is

guilty of acts inimical to the interests of the employer. A company
has the right to dismiss its employees if only as a measure of self-
protection. This is all the more true in the case of supervisors or
personnel occupying positions of responsibility.34 In this case, let it
be remembered that respondent was not an ordinary rank-and-file
employee as she was no less the Treasurer who was in charge of the
coffers of the University. It would be oppressive to require
petitioner to retain in their management an officer who has
admitted to knowingly and intentionally committing acts which
jeopardized its finances and who was untrustworthy in the handling
and custody of University funds.

WHEREFORE, premises considered, we GRANTthe petition. The

assailed Decision of the Court of Appeals in CA-G.R. SP No. 122536
is, thus, SET ASIDE. The Decision of the National Labor Relations
Commission in NLRC RAB III Case No. 07-15131-09 is REINSTATED.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:

DIOSDADO M. PERALTA
Associate Justice

MARTIN S. VILLARAMA, JR.* JOSE CATRAL MENDOZA

Associate Justice Associate Justice

MARVIC MARIO VICTOR F. LEONEN

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached
in consultation before the case was assigned to the writer of the
opinion of the Court's Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson